Kyoritsu Maintenance Co., Ltd. (Securities Code: 9616) Third Quarter of the Fiscal Year Ending March 2019 Consolidated Earnings Results Update

Transcription

1 Kyoritsu Maintenance Co., Ltd. (Securities Code: 9616) Third Quarter of the Fiscal Year Ending March 2019 Consolidated Earnings Results Update February 2019

2 Third Quarter of the Fiscal Year Ending March 2019 Consolidated Earnings Announcement Company Name: Kyoritsu Maintenance Co., Ltd. Tokyo Stock Exchange Stock Code: 9616, URL: Director: Takumi Ueda, President Contact: Koji Nakamura, Director, General Manager of Management Planning Department; Tel: Quarterly Earnings Announcement Report Filing Date (Anticipated): February 13, 2019 Dividend Payment Date (Anticipated): Quarterly Earnings Presentation Document (Anticipated): Yes Quarterly Earnings Presentation Meeting (Anticipated): None February 8, 2019 (All figures of less than one million yen are rounded down to the nearest digit) 1. Third Quarter of the Fiscal Year Ending March 2019 Consolidated Earnings (April 1, 2018 to December 31, 2018) (1) Consolidated Earnings (Aggregated) (% figures show year-on-year change) Net Sales Operating Income Ordinary Income Profit Attributable to Owners of Parent Millions of yen % Millions of yen % Millions of yen % Millions of yen % 3Q FY3/19 123, , , , Q FY3/18 108, , , , (Note) Comprehensive income: 7,780 million (9.2% YoY) in 3Q FY3/19; 7,124 million (21.0% YoY) in 3Q FY3/18 EPS Yen Fully Diluted EPS 3Q FY3/ Q FY3/ (2) Consolidated Financial Position Total Assets Net Assets Equity Ratio Book Value Per Share Millions of yen Millions of yen % Yen 3Q FY3/19 189,345 77, , FY3/18 190,929 71, , (Note) Capital: 77,977 million in 3Q FY3/19; 71,839 million in FY3/18 2. Dividend Conditions Dividend Per Share 1Q-End 2Q-End 3Q-End 4Q-End Total Yen Yen Yen Yen Yen FY3/ FY3/ FY3/19 (Projected) (Note) Recent changes in dividend projections: None 3. Fiscal Year Ending March 2019 Consolidated Earnings Estimates (April 1, 2018 to March 31, 2019) (% figures show year-on-year change for the full year) Net Sales Operating Income Ordinary Income Full Year 164, , , , (Note) Recent changes in earnings estimates: None Yen Profit Attributable to Owners of Parent Millions of yen % (YoY) Millions of yen % (YoY) Millions of yen % (YoY) Millions of yen % (YoY) Yen EPS

3 Notes (1) Important changes in our subsidiaries, including changes to the scope of our consolidation: None (2) Application of special accounting procedures in the preparation of our quarterly consolidated financial statements: Applicable (Note) Please refer to 2. Quarterly Consolidated Financial Statements and Important Notes, (3) Quarterly consolidated financial statement notes (Application of special accounting procedures in the preparation of our quarterly consolidated financial statements) on page11 for more details. (3) Changes in accounting policies, changes in accounting estimates, and restatements: 1. Changes accompanying revisions in accounting standards: None 2. Other changes: None 3. Changes in accounting estimates: None 4. Redisplay of revisions: None (4) Shares Issued (Common Stocks) 1. Shares issued as of term-end (including treasury shares) 2. Treasury stock as of term-end 3. Average during the term (first six months) 3Q FY3/19 39,218,330 FY3/18 39,209,238 3Q FY3/19 227,274 FY3/18 225,193 3Q FY3/19 38,985,028 3Q FY3/18 38,832,276 * Quarterly financial reports are not subject to review by certified public accountants or auditing firms. * Notes and explanations regarding the appropriate use of our earnings projections: Forward-looking statements concerning financial forecasts contained in these materials are based on information available to the Company when the forecasts were made and certain assumptions judged to be reasonable. However, the Company makes no guarantee that these forecasts will be achieved. Actual results may differ significantly from the forecasts due to a variety of factors. Moreover, for information regarding earnings estimates and the assumptions upon which they are based, and the usages of these earnings estimates, please refer to the section, 1. Qualitative Information about Quarterly Earnings, (3) Explanation of future forecasts including consolidated earnings estimates on page 6. (Method for obtaining supplementary explanatory information on financial results) The Company will post supplementary explanatory information on financial results on its website.

4 Index 1. Qualitative Information about Quarterly Earnings 5 (1) Explanation of business performance 5 (2) Explanation of financial position 6 (3) Explanation of future forecasts including consolidated earnings estimates 6 2. Quarterly Consolidated Financial Statements and Important Notes 7 (1) Quarterly consolidated balance sheet 7 (2) Quarterly consolidated income statement and comprehensive income statement 9 Quarterly consolidated income statement Consolidated third quarter 9 Quarterly consolidated comprehensive income statements Consolidated third quarter 10 (3) Quarterly consolidated financial statement notes 11 (Notes regarding going concern assumptions) 11 (Significant changes in shareholders equity notes) 11 (Application of special accounting procedures in the preparation of our quarterly consolidated financial statements) 11 (Additional information) (Segment information)

5 1. Qualitative Information about Quarterly Earnings (1) Explanation of business performance The environment in which the Group operated during the first three quarters of the consolidated fiscal year ending March 31, 2019, was represented by ongoing growth in demand due to increases in the ratio of students going on to higher-level schools and inbound demand topping 30 million people in However, the operating environment was also affected by unpredictable natural disasters from June, including the earthquake in the northern region of Osaka, torrential rain in western Japan, the Hokkaido Eastern Iburi earthquake, and a series of major typhoons. Under these conditions, the Group worked steadily to make a swift recovery from the impact of these natural disasters and implement the two core components of the medium-term management plan, namely improving customer satisfaction and pursuing advanced developments. As a result, operating results during the first three quarters were characterized by growth in net sales of 13.9% year on year, to 123,886 million. With regard to profit, we were able to absorb expenses related to preparations for development, etc. of 1,320 million, as well as costs of 240 million associated with a major program of renewals to improve customer satisfaction and income from the securitization of real estate, leading to an operating income of 12,044 million (up 17.9% year on year), ordinary income of 11,756 million (up 17.7% year on year), and profit attributable to owners of parent of 7,973 million (up 19.7% year on year). The Group achieved record-high levels of profit. We provide details of our earnings by business segment as follows: Dormitory business In the dormitory business, initial occupancy rates were 97.7% (down 0.6 percentage points from the previous fiscal year), but this was caused by the temporary occurrence of empty rooms resulting from the completion of a new dormitory for the exclusive use of schools. In the first three quarters, the number of contracts in the student dormitory business returned to the previous trend, in addition to which the corporate dormitory business also saw an increase in the number of contracts as a result of such factors as companies introducing dormitory systems. In terms of costs, the Company recorded 130 million in expenses related to preparations for development, etc. as a result of opening a new facility, as well as costs of 100 million in relation to a major program of renewals for existing facilities. As a result, net sales reached 35,750 million (up 4.0% year on year) and operating income came to 5,171 million (up 0.04% year on year). Hotel business In the Dormy Inn (business hotel) business, the Company opened the Natural Springs Nanbu no Yu Dormy Inn Honhachinohe, Natural Springs Shiraito no Yu Dormy Inn Oita, Natural Springs Naniwa no Yu Dormy Inn Osaka Tanimachi, Kasuga no Yu Dormy Inn Korakuen, Dormy Inn global cabin Hamamatsu, Natural Springs Tamamo no Yu Dormy Inn Takamatsuchuokoenmae, Dormy Inn Global Cabin Yokohama Chukagai, and Natural Springs Asagiri no Yu Dormy Inn PREMIUM Namba ANNEX. Although the aforementioned natural disasters did have an impact, the number of inbound customers increased significantly, exceeding the previous year s levels in all months. In addition, use by many domestic customers made a contribution, and revenue per available room (RevPAR, calculated as the product of the occupancy rate for each room and the average room price), an important management indicator, continued to rise. In the resort hotel business, we opened LA VISTA Kirishima Hills as our first resort in the Kyushu region. We will continue to promote the creation of resorts that will be loved by customers and become a familiar part of their lives. Occupancy rates temporarily fell below previous-year levels due to natural disasters, and although it took some time to recover, progress in improving customer satisfaction led to an increase in the daily room price and RevPar in the third quarter of the fiscal year (October-December 2018). As a result, net sales rose by 12.3% year on year to 59,545 million. Despite 1,180 million in expenses related to preparations for development, etc. including the portion arising from new facilities scheduled to be opened in the future and 140 million in costs for major renovations to existing facilities, as well as the impact of natural disasters, operating income rose a steady 11.7% year on year to 7,496 million. Contracted services business In the contracted services business, net sales rose due to an increase in construction projects, but profit fell due to the expiry of certain contracts in the building management division. As a result, sales increased 6.0% to 10,903 million and operating income fell by 91.6% year on year to 18 million. Food service business In the food service business, sales rose due to growth in the number of contracted hotel restaurants managed, but profit fell due to the - 5 -

6 costs incurred in preparing for the launch of a restaurant business. Consequently, sales increased by 3.0% to 5,246 million and operating income fell by 27.9% year on year to 84 million. Construction business In the construction business, net sales fell as a result of the decline in construction projects, but profit increased significantly due to real estate liquidation. As a result, sales fell by 7.3% to 14,005 million and operating income increased by 162.8% year on year to 1,603 million. Other business Our other business segments are the Senior Life business (management of senior citizen housing), the PKP business (consigned services business provided to regional government bodies), single life support services, insurance agency business, comprehensive human resource services business, and financing and administrative outsourcing services. The other business segments posted total net sales of 9,296 million, an increase of 5.0% year on year, and incurred an operating loss of 57 million, in comparison with an operating loss of 226 million in the same period of the previous fiscal year. (2) Explanation of financial position (Assets) Total consolidated assets fell by 1,583 million from the end of the previous fiscal year to 189,345 million at the end of the third quarter. The main factor behind this fall was a decrease in cash and deposits, and construction in progress. (Liabilities) Total consolidated liabilities fell by 7,721 million from the end of the previous fiscal year to 111,368 million at the end of the third quarter, due primarily to a decrease in notes and accounts payable trade and bonds payable. (Net assets) Net assets grew by 6,138 million from the end of the previous fiscal year to 77,977 million at the end of the third quarter, due mainly to a rise in retained earnings. Consequently, equity ratio increased by 3.6 percentage points from the end of the previous fiscal year to 41.2% at the end of the third quarter. (3) Explanation of future forecasts including consolidated earnings estimates Our consolidated earnings estimates for the fiscal year ending March 31, 2019, as provided on November 9, 2018, remain unchanged at this point in time

7 2. Quarterly Consolidated Financial Statements and Important Notes (1) Quarterly consolidated balance sheet (Unit: Millions of yen) FY3/18 (March 31, 2018) 3Q FY3/19 (December 31, 2018) Assets Current assets Cash and deposits 17,298 14,447 Notes and accounts receivable trade 10,603 8,947 Real estate for sale Costs on uncompleted construction contracts Real estate for sale in process 2,652 2,086 Other 7,247 6,909 Allowance for loan losses (26) (27) Total current assets 38,353 32,880 Non-current assets Property, plant and equipment Buildings and structures, net 42,694 43,864 Land 40,846 42,912 Construction in progress 16,335 14,067 Other, net 3,087 3,466 Total property, plant and equipment 102, ,310 Intangible assets 4,012 4,060 Investments and other assets Investment securities 5,093 5,057 Guarantee deposits 16,054 16,274 Lease deposits 13,516 14,684 Other 10,575 11,781 Allowance for doubtful accounts (203) (210) Total investments and other assets 45,036 47,587 Total non-current assets 152, ,958 Deferred assets Total assets 190, ,

8 FY3/18 (March 31, 2018) (Unit: Millions of yen) 3Q FY3/19 (December 31, 2018) Liabilities Current liabilities Notes and accounts payable trade 7,998 5,058 Short-term loans payable 12,915 18,134 Current portion of bonds 4,638 4,470 Income taxes payable 2,597 1,693 Provision for bonuses 2,071 1,459 Provision for directors bonuses Provision for warranties for completed construction 9 9 Provision for point card certificates 3 3 Other 21,664 17,463 Total current liabilities 52,287 48,623 Non-current liabilities Bonds payable 32,230 29,270 Convertible bond-type bonds with subscription rights to shares 20,000 19,995 Long-term loans payable 8,662 7,346 Director retirement benefit reserve Provision for point card certificates 5 6 Net defined benefit liability 1,089 1,154 Other 4,544 4,701 Total non-current liabilities 66,802 62,744 Total liabilities 119, ,368 Net assets Shareholders equity Capital stock 7,949 7,960 Capital surplus 12,805 12,816 Retained earnings 51,270 57,592 Treasury shares (336) (347) Total shareholders equity 71,690 78,021 Accumulated other comprehensive income Valuation difference on available-for-sale securities Foreign currency translation adjustment (378) (389) Remeasurements of defined benefit plans 12 9 Total accumulated other comprehensive income 149 (44) Total net assets 71,839 77,977 Total liabilities and net assets 190, ,

9 (2) Quarterly consolidated income statement and comprehensive income statement (Quarterly consolidated income statement) (Consolidated third quarter) 3Q FY3/18 (April 1, 2017 to December 31, 2017) (Unit: Millions of yen) 3Q FY3/19 (April 1, 2018 to December 31, 2018) Net sales 108, ,886 Cost of sales 83,317 94,996 Gross profit 25,408 28,889 Selling, general and administrative expenses 15,194 16,845 Operating income 10,214 12,044 Non-operating income Interest income Dividend income Deposit redemption income Other Total non-operating income Non-operating expense Interest payment Other Total non-operating expenses Ordinary income 9,985 11,756 Extraordinary income Gain on sales of non-current assets Gain on sales of investment securities 1 18 Other 25 - Total extraordinary income Extraordinary losses Provision for loss on disaster - 21 Loss on retirement of non-current assets - 3 Loss on sales of property, plant and equipment Dismantlement costs Other 2 - Total extraordinary losses Income before income taxes 9,978 11,750 Income taxes 3,316 3,776 Profit 6,661 7,973 Profit attributable to owners of parent 6,661 7,

10 (Quarterly consolidated comprehensive income statements) (Consolidated third quarter) 3Q FY3/18 (April 1, 2017 to December 31, 2017) (Unit: Millions of yen) 3Q FY3/19 (April 1, 2018 to December 31, 2018) Profit 6,661 7,973 Other comprehensive income Valuation difference on available-for-sale securities 288 (179) Foreign currency translation adjustment 176 (11) Remeasurements of defined benefit plans (3) (2) Total other comprehensive income 462 (193) Comprehensive income 7,124 7,780 (Details) Comprehensive income attributable to owners of parent 7,124 7,

11 (3) Quarterly consolidated financial statement notes (Notes regarding going concern assumptions) Not applicable (Significant changes in shareholders equity notes) Not applicable (Application of special accounting procedures in the preparation of our quarterly consolidated financial statements) (Calculation of tax expense) The Company applies the method that reasonably estimates an effective tax rate to be assessed on income before income taxes for the year ending March 31, 2019, including the nine months ended December 31, 2018, after accounting for the tax effects, and multiplies income before income taxes during the nine months ended December 31, 2018 by this estimated effective tax rate. However, in the event that the estimate for the effective tax rate appears to lack logical rationale, then the legally determined effective tax rate is employed. (Additional information) (Application of Partial Amendments to Accounting Standard for Tax Effect Accounting, etc.) The Company has applied Partial Amendments to Accounting Standard for Tax Effect Accounting (ASBJ Statement No. 28, February 16, 2018) from the beginning of the first quarter of the current fiscal year. Deferred tax assets are presented in investments and other assets section, and deferred tax liabilities are presented in the non-current liability section of the balance sheet respectively

12 (Segment information) Segment information I. Third quarter of the fiscal year ended March 2018 (From April 1 to December 31, 2017) 1. Information pertaining to segment sales, profits and losses Sales Dormitories Hotels Reporting segments Contracted Services Food Services Construction Subtotal Other (Note 1) Total (Unit: Millions of yen) Adjustments (Note 2) Consolidated (Note 3) External sales 34,160 52,900 5,665 1,188 6, ,224 8, , ,726 Inter-segment sales and transfers ,623 3,907 8,791 17, ,022 (18,022) - Total 34,378 53,029 10,289 5,095 15, ,893 8, ,749 (18,022) 108,726 Segment profit/loss 5,168 6, ,835 (226) 12,608 (2,394) 10,214 (Notes) 1. Other is not considered as a reporting business segment and is comprised of the Senior Life (management of senior citizen housing), PKP business (consigned services business provided to regional government bodies), single life support services, insurance agency business, comprehensive human resources, financing, administrative outsourcing services, and other related services. 2. Adjustment for segment profit and loss of 2,349 million includes 430 million for inter-segment transaction eliminations, and 1,963 million in companywide expenses that cannot be allocated to specific reporting segments. Companywide expenses are primarily those expenses arising from the accounting and management divisions. 3. Segment income (loss) has been adjusted to operating income described in quarterly consolidated statements of income. 2. Impairment accounting losses and goodwill amortization of fixed assets by reporting segments None

13 II. Third quarter of the fiscal year ending March 2019 (From April 1 to December 31, 2018) 1. Information pertaining to segment sales, profits and losses Sales Dormitories Hotels Reporting segments Contracted Services Food Services Construction Subtotal Other (Note 1) Total (Unit: Millions of yen) Adjustments (Note 2) Consolidated (Note 3) External sales 35,499 59,422 5,492 1,014 13, ,971 8, , ,886 Inter-segment sales and transfers ,410 4, , ,862 (10,862) - Total 35,750 59,545 10,903 5,246 14, ,451 9, ,748 (10,862) 123,886 Segment profit/loss 5,171 7, ,603 14,375 (57) 14,317 (2,272) 12,044 (Notes) 1. Other is not considered as a reporting business segment and is comprised of the Senior Life (management of senior citizen housing), PKP business (consigned services business provided to regional government bodies), single life support services, insurance agency business, comprehensive human resources, financing, administrative outsourcing services, and other related services. 2. Adjustment for segment profit and loss of 2,272 million includes 57 million for inter-segment transaction eliminations, and 2,330 million in companywide expenses that cannot be allocated to specific reporting segments. Companywide expenses are primarily those expenses arising from the accounting and management divisions. 3. Segment income (loss) has been adjusted to operating income described in quarterly consolidated statements of income. 2. Impairment accounting losses and goodwill amortization of fixed assets by reporting segments None